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Q16. Which term does NOT apply to interest rate swaps? ffice ffice" />
A) Time to maturity.
B) Notional principal amount.
C) Trading exchange.
Correct answer is C)
Interest rate swaps are currently not traded on exchanges.
Q17. Which of the following statements is TRUE concerning the above diagram? Counterparty:
A) A will gain in the swap when interest rates increase.
B) B pays a fixed rate to counterparty A.
C) B will gain in the swap when interest rates increase.
Correct answer is A)
From the diagram, counterparty A pays fixed to and receives variable from counterparty B. As interest rates rise, counterparty B owes counterparty A higher variable payments.
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Fixed |
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Counterparty |
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Counterparty |
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A |
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B |
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Variable |
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Q18. Which of the following statements is most accurate concerning the above diagram?
A) Counterparty A will gain in the swap when interest rates increase.
B) Counterparty B will gain in the swap when interest rates increase.
C) Counterparty B pays a fixed rate to counterparty A.
Correct answer is A)
From the diagram, counterparty A pays fixed to and receives variable from counterparty B. As interest rates rise, counterparty B owes counterparty A higher variable payments, while A’s obligations are fixed.
Q19. Which of the following statements regarding a plain vanilla swap is FALSE?
A) Only a net payment is made on each settlement date.
B) The notional principal amounts are exchanged at contract initiation and at the termination of the swap.
C) If interest rates decrease, the swap has a negative value to the fixed rate payer.
Correct answer is B)
There is no exchange of the principal amount at the initiation or termination of a plain vanilla swap.
Q20. A swap in which one party pays a fixed rate, one party pays a floating rate, and only a net payment is made on the settlement dates is referred to as a:
A) plain vanilla swap.
B) straight swap.
C) net swap.
Correct answer is A)
A swap in which one party pays a fixed rate, one party pays a floating rate, and only a net payment is made on the settlement dates is referred to as a plain vanilla swap.
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发表于 2009-3-2 12:13
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